1. Joe Myatt Jeff Brook Kerri Lin Mike Suchy February 9, 2001
Papa John’s Pizza
Joe Myatt
Jeff Brook
Kerri Lin
Mike Suchy
February 9, 2001

2. Original Reasons for Purchase:
Small cap stock to balance portfolio
Quality & consistency of management (earnings history)
Aggressive past growth
Highest customer satisfaction within industry
Stock was thought to be undervalued at purchase price
Very focused business plan
We purchased /16 on 4/26/2000

3. Reasons leading to review:
Blaine Hurst, President and Vice Chairman and Dru Milby, Senior V.P., C.F.O., and Treasurer have left the company in the past months.
The Company changed its capital structure to now included significant long-term debts.
They’ve spent 187 million dollars repurchasing their shares, 1/3 total market capitalization, and have not been able to increase their share price.
The economy has gone into a period of contraction, tightening the availability of credit for franchisees to open new stores. This raises concerns over their ability meet new store opening estimates.

4. Reasons leading to review:
They’ve missed new store opening targets for 2000 that were given on 9/18/00 and 12/12/00.
They’ve missed earnings in the third quarter 2000 and lowered earnings predictions by 20% for Announced that 4th quarter one time charge to dispose of long-lived assets will be between million from previously stated million
Eroding faith in management’s credibility.
Our financial models place value of firm below current share price

5. Summary:
We have lost faith in management and do not approve of the change in their capital structure to repurchase shares. We do not believe that the company can grow new stores and free cash flow at rates high enough justify its market valuation. Therefore, Papa John’s does not offer favorable long-term price appreciation adjusted for risk and should be sold.
We have sold /16 on 2/9/2001